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Lucas: a flawed attempt to redefine the Mahon analysis.

The South Carolina majority in Lucas,(1) in upholding the Beachfront Management Act,(2) reverted to the takings test that prevailed before the U.S. Supreme Court decided Pennsylvania Coal in 1922.(3) Despite the Court's rejection of that test in Mahon, the test has continued to pop up every so often since then.(4) The state court reasoned that since there was a valid public purpose behind the South Carolina Act, in essence the prohibited conduct became a noxious use, and, therefore, was not protected as property by the takings clause.(5) The U.S. Supreme Court, of course, reversed the South Carolina court's holding that the Act was not a taking, disagreed rather emphatically with their analysis, and then sent it back for reconsideration under the new standard as stated.(6)

Essentially, the Supreme Court majority applied Justice Holmes' two-part analysis from the Mahon case(7) rather than Justice Brandeis' dissenting analysis from the same case(8) which was more consistent with the preexisting test developed in Mugler v. Kansas.(9) The Lucas Court reasoned that even though the purpose of South Carolina's law was valid, that validity didn't insulate the law from scrutiny over whether it constituted a takings because the law too severely diminished the value of Lucas' land. Of course, the Lucas case presents either a total or a close-to-total loss of market value, so the probable result under the Mahon analysis was obvious from the start. Consequently, I thought the Lucas holding by itself wasn't particularly earth shattering.

There are several major decisions since Mahon where the Court has just ignored that analysis where convenient, such as Goldblatt v. Town of Hempstead,(10) Miller v. Schoene,(11) and Keystone Bituminous Coal Ass'n v. DeBenedictis.(12) But the Lucas majority's result, if not all of their opinion, is completely consistent with the Mahon analysis. Essentially, petitioner Lucas was totally wiped out by a regulation enacted after he purchased the property. The deprivation of property value, especially considering the $900,000 mortgage he assumed to buy the land, was certainly well over Holmes' vague indefinable line(13) and into the taking category.

For me, the most interesting part of the case was how the majority framed the opinion. It always bothers me when every Justice on every side of a takings case has to pretend that all the previous takings cases are consistent with their line of reasoning. I thought both Justices Scalia and Blackmun weakened their arguments by trying to make every takings case in the last 100 years consistent with what they were saying. They would have done better to admit that there are some they couldn't square.

Dealing first with Justice Scalia's majority opinion, the problem is: how can he explain that long line of cases emanating from Mugler, in which the Court has sustained, against takings attacks, laws that caused land owners in effect to loose 100% of the market value.(14) Justice Rehnquist, in some of his earlier opinions, attempted to explain these cases by labelling them "nuisance" or "noxious" use cases.(15) Harking back to the old aphorism that there is no property right in a nuisance, Rehnquist argued that these cases fell into a nuisance exception to the usual takings analysis.(16) From that perspective, the issue becomes: how broad is this nuisance exception? If it covers every instance where the state has authority to regulate, then it completely swallows up Holmes' basic rule that at some point an extreme decline in value can become a takings. This is because any judicial finding that a land use statute has valid public purpose, would amount to a legislative declaration that the prohibited conduct was a noxious use and, ipso facto, the use would be not "property" and not protected by the takings clause.

That was the dilemma Lucas presented to the Supreme Court. The South Carolina majority read the noxious use cases this broadly, reasoning that the legislature, by passing the Act, had decreed building on beachfront property to be a noxious use, and, therefore, no compensation was owing.(17) The South Carolina majority and Justice Blackmun essentially said, "So what if Lucas got wiped out? Declaring a previously lawful use to be a noxious use is precisely what happened in Mugler, Hadacheck, and a number of other cases. Those folks didn't get paid either. Sorry about that, but Lucas is right in their line."

If you are part of Justice Scalia's majority, though, and you want to protect land owners whose property is totally destroyed by such a change of policy, you have to distinguish or otherwise evade some of those older cases. What the Lucas majority did first was to redefine the concept of a harmful or noxious use, explaining that the noxious use concept was just an early attempt to explain why, in some cases not resulting in total deprivation of economic value, government could regulate and affect land value without having to compensate the owner.(18) So, the majority initially concluded that compensation was required any time a land owner suffered total destruction of property value, and the legislature couldn't take this right away simply by claiming that it was controlling a noxious use.(19)

I think that whether you like the case's result or not, you have to concede that, as the majority pointed out, South Carolina's interpretation of the noxious use theory removed all limits to the police power. In passing, I would also note that there is a similar issue, in both public trust and eminent domain cases, concerning the extent that a legislative declaration of public purpose prevents the courts from second-guessing the legislature.(20) Generally, any time a court has announced, "Oh, we'll never second guess the legislature," the legislature has declared some purpose that was so extreme and highly theoretical that the courts have jumped back in again.(21) So, I think we have a continuum here that the Supreme Court is never going to satisfactorily or permanently resolve one way or another.

The primary flaw I see in the majority's opinion is that having established the principle that you have to pay the land owner for a total wipe-out of value, and having eliminated the "noxious use" exception to the principle, they dragged the exception right back in again. The majority said that when the state seeks to sustain regulation depriving the landowner of all beneficial use, they may do so if inquiry into the owner's estate shows that the use being denied wasn't part of the title to begin with.(22) In other words, if you never had the right to do it in the first place, then it isn't a taking if the legislature tells you to stop doing it. The Court cited examples such as a nuclear generating plant on an earthquake fault,(23) where the legislature's prohibition, in effect, would crystallize the principles of nuisance. The Court stated that if the legislature was merely making explicit "background principles of the State's law of property and nuisance law,"(24) then compensation was not required.

The majority then suggested in dicta that, in this case, common law principles probably wouldn't prevent erection of all habitable structures on Lucas' land,(25) the majority noted, however, that this determination was for the state court to make on remand.(26) that hearing, the court can't just accept the legislature's conclusion that there is a public purpose behind the law and that therefore compensation is not required. Rather, the court must identify background principles of nuisance and property law that would prohibit the use that Lucas(27) intends. If the South Carolina court can find that the building of a beach house in this circumstance was never part of Lucas' property right or that it would constitute a nuisance, then nothing in the majority opinion would prevent them from upholding the law.

Justice Blackmun's dissent noted a number of problems with the majority opinion. He took issue with their asserted per se rule for cases involving total loss,(28) and argued that Lucas still retained some economic value in his land.(29) I thought that this was the weakest part of an otherwise strong opinion, and it undercut some of his other points. Blackmun was just grasping at straws in trying to argue that Lucas retained any significant value in his land without being able to build on it.(30) Still, Blackmun was certainly on solid ground when he noted that a whole line of cases emanating from Mugler have upheld regulations resulting in a total loss of market value to the affected landowners.(31) He pointed out that Scalia's distinction between total and near total loss of property value is going to be as difficult a distinction to apply as some of the distinctions Scalia was trying to avoid.(32)

Justice Blackmun also noted that not only did the majority drag nuisance right back into the analysis after trying to remove it as an exception to their per se rule, but also they did so in a way that was inconsistent with the Mugler line of cases.(33) All of those cases involved legislative declarations. The brewery in Mugler was not a common law nuisance;(34) there wasn't anything wrong with it until the Kansas legislature prohibited breweries. Similarly, the brickyard in Hadacheck and the diseased cedar trees in Miller were both lawful uses until the legislature prohibited them. Yet, as Blackmun pointed out, the majority had apparently limited the legislatures to background principles of nuisance rather than allowing them to define new instances of harm. So, Justice Blackmun asked, what is so sacrosanct about common law nuisance? If an eighteenth century judge could make the kind of distinctions which determine what is and what is not a nuisance, why can't a twentieth century judge? And if modern judges can do it, why can't state legislatures? According to Blackmun, judges aren't the only ones who can tell the difference between a harm and a benefit.(35)

Justice Blackmun also criticized the majority's historical analysis. He pointed out that they had taken different principles from different eras, and put together a grab bag of historical principles.(36) For instance, the initial understanding, in the late eighteenth and early nineteenth centuries was that if there was a valid public purpose, a legislature could lower or eliminate property value without compensating the landowner.(37) This was exactly what the South Carolina court found in Lucas. Yet, as Blackmun pointed out, Scalia's majority chose to ignore these clear precedents. Blackmun conceded that by the late nineteenth and early twentieth centuries, the notion had developed that compensation might lie for regulatory taking in some instances;(38) But at that point, it was also recognized that the legislature could declare what would and would not be nuisances, and was not limited just to crystallizing common law principles.(39) So, Blackmun concluded that the majority offered a collection of historical concepts from different eras, picking the ones that supported the majority position, and ignoring the ones that didn't.(40)

Of course, one could point out that Justice Scalia is not the first Supreme Court Justice ever to do that. William Douglas used to make a living out of distorting history to support his views, and Scalia may be no different.

(1.) Lucas v. South Carolina Coastal Council, 404 S.e.2d 895 (S.C. 1991). (2.) S.C. CODE ANN. [sub section] 48-39-10, -130, -250 to 360 (Law. Co-op. Supp. 1992). (3.) Pennsylvania Coal v. Mahon, 260 U.S. 393 (1922). (4.) See, e.g., Miller v. Schoene, 270 U.S. 272 (1928); Goldblatt v. Town of Hempstead, 369 U.S. 590 (1962); Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470 (1987). (5.) Cf. Mugler v. Kansas, 123 U.S. 623 (1887). (6.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886 (1992). (7.) 260 U.S. at 412. (8.) Id. at 416 (Brandeis, J., dissenting). (9.) 123 U.S. 623 (1887). (10.) 369 U.S. 590 (1962). (11.) 270 U.S. 272 (1928). (12.) 480 U.S. 470 (1987). (13.) Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922) ("[I]f a regulation goes to far it will be recognized as a taking."). (14.) See, e.g., Hadacheck v. Sebastian, 239 U.S. 394 (1915); Reinman v. City of Little Rock, 237 U.S. 171 (1915); Pierce Oil Co. v. City of Hope, 248 U.S. 498 (1919); Goldblatt v. Town of Hempstead, 369 U.S. 590 (1962). (15.) E.g., Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 506 (1987) (Rehnquist, J., dissenting); Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 138 (1970) (Rehnquist, J., dissenting). (16.) Which is derived from, but not explicitly stated in, Mugler v. Kansas, 123 U.S. 623 (1887). (17.) Lucas v. South Carolina Coastal Council, 404 S.E.2d 895 (1991). (18.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2887-99 (1992). "None of [the cases] that employed the logic of |harmful use' prevention to sustain a regulation involved an allegation that the regulation wholly eliminated the value of the claimant's land." Id. at 2899. (19.) Id. at 2899. (20.) In the eminent domain area, see Berman v. Parker, 348 U.S. 26 (1954), and Hawaii Housing Auth. v. Midkiff, 467 U.S. 229 (1984), both showing extreme deference to legislative declarations of public purpose. (21.) See Priewe v. Wisconsin State Land & Improvement Co., 67 N.W. 918 (Wis. 1896). Shortly after the Wisconsin Supreme Court had determined that the public trust was primarily a legislative determination, the state legislature, in a singular instance of Gilded Age graft, sold Lake Winnebago to a private developer, to be drained and replaced by housing. The legislature recited as a public purpose that the big but shallow lake contained many swampy areas, which served as breeding grounds for malaria-carrying mosquitoes; and that the public would be better served by draining the lake and building housing. The Supreme Court decided that determination of a public purpose was ultimately a judicial, not a legislative, issue, and they reversed the transfer of the bed of the lake to private parties. See also International Paper Co. v. Mississippi State Highway Dep't, 271 So.2d 395 (Miss. 1973). (22.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2899 (1992). (23.) Id. at 2900. (24.) Id. (25.) Id. at 2901. (26.) Id. (27.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2901-02 (1992). (28.) Id. at 2910 (Blackmun, J., dissenting). (29.) Id. at 2908 (Blackmun, J., dissenting). (30.) Of course, Justice Blackmun is not the first Supreme Court Justice in a takings case to avoid difficult precedent by pretending that the facts are different than what they really are. His approach on this point was reminiscent of the majority's analysis in Goldblatt v. Town of Hempstead, 369 U.S. 590 (1962). In that case the majority insisted that the owner of the affected sand and gravel pit had only lost one possible use of the land. In fact, however, the gravel pit was already so deep that filling in the land for any other use far exceeded the restored value of the land. For an extreme example of judicial denial, see United States v. Central Eureka Mining Co., 357 U.S. 155 (1958), where an eight-judge majority pretended that fifty years of regulatory takings law did not exist. (31.) Lucas, 112 S. Ct. 2886, 2910 Blackmun, J., dissenting). See also cases cited supra notes 9-13. (32.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2913 (1992) (Blackmun, J., dissenting). (33.) Id. at 2912-13 (Blackmun, J., dissenting). (34.) Id. at 2913 (Blackmun, J., dissenting). (35.) Id. at 2914 Blackmun, J., dissenting). (36.) Id. at 2917 (Blackmun, J., dissenting). (37.) E.g., Commonwealth v. Tewksbury, 52 Mass. (11 Met.) 55 (1846). (38.) Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2917 n.26 (1992). (39.) Id. at 2917. (40.) Id.
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Title Annotation:A Colloquium on Lucas
Author:Large, Donald
Publication:Environmental Law
Date:Jul 1, 1993
Previous Article:Introduction and decision.
Next Article:Revolution or restatement? Awaiting answers to Lucas' unanswered questions.

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